Doug Ford’s housing bill threatens Toronto's budget and affordable housing goals, city manager warns

Toronto’s interim city manager says shelter and affordable rental programs are at risk as the city faces a projected $200-million loss

Thestar.com
Nov. 21, 2022
Victoria Gibson

A briefing note to Toronto council is warning that new Ontario legislation could harm the city’s ability to build new affordable rentals and homeless shelters, and protect ones that already exist.

And it would do so while taking an estimated $200-million from the city’s embattled coffers.

The newly released note, penned by interim city manager Tracey Cook, warns that changes proposed under the province’s Bill 23 -- dubbed the More Homes Built Faster Act -- would impact Toronto’s ability to deliver on its 10-year housing targets, invest in new shelter services, and carry on with several of its affordable housing development and protection programs.

It backs concerns cited by Mayor John Tory, along with non-profit and housing groups, in a Star report earlier Friday that examined fears swirling around the omnibus bill. The proposed legislation would amend several Acts, with the aim of building 1.5 million new homes by 2031.

Among changes, the bill would alter where the city can impose development charges, Cook wrote. Specifically, it would remove “housing services” from the list of eligible builds.

Toronto's interim city manager Tracey Cook warned in a briefing note to council that the housing bill could put 'upward pressure on property taxes.'

In doing so, Cook warned the legislation could jeopardize the future of Toronto’s Housing Now program -- an initiative that builds mixed-use developments on city land, and is already facing delays and at risk from rising interest rates -- as well as the Open Door program that offers financial incentives to developers that build affordable rental units.

Also at risk, the note says, is a fledgling program that aims to protect existing affordable homes.

The Multi-Unit Residential Acquisition Program, or MURA, launched last year, funds the purchase of low-cost housing like rooming houses and apartments with up to 60 units, in order to safeguard them from the open market. It aims to ensure Toronto’s sparse and coveted affordable rentals don’t become more expensive homes when existing tenants move out.

A separate change proposed under Bill 23 would decrease the amount of affordable housing required under the city’s inclusionary zoning policies, Cook wrote, as well as the years in which they’re protected. “This would directly impact the City’s ability to deliver the HousingTO 2020-2030 Plan targets, including securing affordable homes in perpetuity,” the briefing note reads.

The document was released in advance of council’s first meeting of the new term next week, and comes a day after rentals.ca data showed the average asking rent for a Toronto one-bedroom has increased by 23.7 per cent in the last year, now at $2,505 per month.

Meanwhile, Toronto’s shelter system has been battling against capacity, with just a handful of emergency beds available by night’s end on Thursday -- and zero emergency beds for women.

Other GTA jurisdictions are expected to release analyses of Bill 23 in the coming weeks. Aileen Baird, director of housing services for Peel Region, which encompasses Brampton, Caledon and Mississauga, says she anticipates delivering a report to the region’s council on Dec. 8.

In Toronto, Cook’s note also offers a preliminary estimate of the financial blow Bill 23 would deliver, if enacted.

Earlier this month, Tory issued an open letter to the provincial and federal governments, appealing for hundreds of millions of dollars to help fill the city’s budget holes by Nov. 30.

To balance the books for 2022 as legally required of the municipality, Tory wrote, Toronto needed an extra $815 million. Meanwhile, the Star’s David Rider reported the city is confronting a gap of $1.48 billion between its revenues and expenses for next year -- owing to lingering costs from the pandemic, as well as other financial pressures like rising interest rates.

City hall staff expect the annual financial blow from Bill 23 would be roughly $200 million, Cook wrote, of which the lion’s share -- $130 million -- was related to removing housing services from the development charge list. The city also expects tens of millions in revenue losses, plus a yet-to-be-determined impact from altering its community benefits charge.

When asked about the city briefing note, a spokesperson for Ontario Housing Minister Steve Clark pointed to development charge dollars sitting unspent in Toronto’s reserve funds -- $2.3 billion as of late 2021, spokesperson Victoria Podbielski wrote, citing ministry figures.

Development charges are typically collected when building permits are issued, and the resulting infrastructure comes later. Toronto makes plans to use those funds for the likes of affordable housing and transit over a 10-year period, and last year estimated its plan required $3.3 billion.

In a committee hearing this week, Toronto controller Andrew Flynn said all development charges in the reserve fund had already been allocated to specific projects. “The presumption that the city is sitting on pots of money and not allocating it is patently and demonstrably not true. The money that is received from development charges is completely committed,” he said.

Asked about Cook’s assessment, Tory spokesperson Don Peat said the mayor had been raising the same concern with provincial officials over the last week. “We need to get more housing built as quickly as possible,” Peat wrote. “But we also have to make sure that our City of Toronto housing initiatives aren’t impacted to the tune of more than $200 million a year.”

Either city services will get worse, Cook’s note suggested, or residents will foot the bill through their taxes -- a warning that comes after Tory pledged to keep the 2023 hike below inflation.

“The proposed Bill could also have the unintended effect of slowing the supply of housing or lowering City service levels, such that the City cannot provide new services to support growth,” the briefing note reads. “Alternatively, it could place upward pressure on property taxes.”